‘Sin taxes’ have po­ten­tial

Chronicle (Zimbabwe) - - National News -

ADISCUSSION that may see the Govern­ment in­tro­duc­ing taxes on po­ten­tially harm­ful prod­ucts, among them cig­a­rettes and al­co­holic bev­er­ages, is on­go­ing. Amid the pre­vail­ing eco­nomic chal­lenges, Govern­ment spend­ing on health, like many other obli­ga­tions, has de­clined sharply. From time to time, hos­pi­tals run out of im­por­tant drugs as hap­pened at Ingut­sheni Psy­chi­atric Hos­pi­tal re­cently, as well as Mpilo and Harare hos­pi­tals. Med­i­cal equip­ment at most public health in­sti­tu­tions is old and fre­quently breaks down. Food sup­plies are er­ratic as well.

Donors are help­ing in a big way, but one of the lessons we learn from the dif­fi­cul­ties we are fac­ing as a coun­try is that as long as the na­tional bud­get is in­suf­fi­cient to fi­nance our health sec­tor, and oth­ers, we will al­ways have gaps.

Speak­ing at an an­nual gen­eral meet­ing of the Com­mu­nity Work­ing Group on Health (CWGH) in Harare re­cently, an of­fi­cial in the Min­istry of Health and Child Care, Mr Gwati Gwati, high­lighted a num­ber of fund­ing pro­pos­als that the Govern­ment was con­sid­er­ing to im­prove the sit­u­a­tion.

A once-off five per­cent ad­di­tion to the fuel levy and in­tro­duc­tion of a value added tax (VAT) for health were op­tions that could be pur­sued. He men­tioned the so-called “sin taxes” as well, levies that a Govern­ment can im­pose on po­ten­tially dan­ger­ous prod­ucts such as cig­a­rettes and al­co­hol to dis­cour­age their con­sump­tion while rais­ing the much needed money to fi­nance health ac­tiv­i­ties. A pol­icy brief drafted in May last year said the “sin taxes” can gen­er­ate up to $20 mil­lion by 2022. The pro­posed tax on the ex­ist­ing fuel levy can raise $14 mil­lion yearly, said Mr Gwati whereas the VAT for health can raise be­tween $100 and $200 mil­lion over the same pe­riod.

We are care­ful not to sup­port ad­di­tional gen­eral taxes on the peo­ple since we are sub­stan­tially taxed al­ready. We have some of the high­est fuel prices in Sadc thus an ad­di­tional tax on it as high­lighted by Mr Gwati will make the com­mod­ity and the cost of trans­porta­tion more ex­pen­sive. This will ob­vi­ously cause an ad­verse im­pact on the wider econ­omy given the cen­tral­ity of fuel in the run­ning of the econ­omy. At the same time, a VAT for health would be an­other gen­eral bur­den.

There­fore, “sin taxes” on tobacco and al­co­holic prod­ucts would be a bet­ter op­tion. These will im­pact on a smaller seg­ment of the pop­u­la­tion, whose con­sump­tion of al­co­hol and tobacco prod­ucts iron­i­cally of­ten re­sults in an ad­di­tional strain on the poorly funded health ser­vices sec­tor when they fall sick. Tobacco smok­ers fre­quently suf­fer from lung can­cer and when one suf­fers from the disease, he or she will re­quire ex­pen­sive treat­ment. Ex­ces­sive con­sump­tion of al­co­hol has many so­cial and eco­nomic im­pacts that the econ­omy has to bear from time to time. So “sin taxes” will help in rais­ing re­sources to not only take care of those who con­sume the haz­ardous prod­ucts but also raise re­sources to fund other pro­grammes and ac­tiv­i­ties that en­hance the health of the na­tion. They also dis­cour­age con­sump­tion when the prices of harm­ful prod­ucts are in­creased given an ad­di­tional levy.

In­deed, “sin taxes” are con­ven­tion­ally levied on al­co­hol and tobacco prod­ucts, but we have seen some coun­tries im­pos­ing newer op­tions which our govern­ment can con­sider.

Among them are sugar and soda taxes de­signed to fight obe­sity. They can be levied on casino spend­ing as well. Even spend­ing on video games too. Two years ago Mex­ico im­posed a “sin tax” on so­das and junk food, around the same time when Bri­tain was con­sid­er­ing a sugar tax.

Sug­ars are some of the big­gest causes of obe­sity the world over and health ex­perts dis­cour­age peo­ple from con­sum­ing too much of them. Spend­ing in casi­nos is also dis­cour­aged given the ad­verse so­cial im­pli­ca­tions as­so­ci­ated with too much gam­bling, among them ad­dic­tion, fam­ily break­downs and poverty.

There­fore, sug­ars and casino spend­ing are deemed harm­ful just like spend­ing on tobacco and al­co­hol. The pro­posed taxes on these prod­ucts would be an ef­fort to dis­cour­age spend­ing on them and their con­sump­tion while also help­ing the econ­omy to profit from rev­enue de­rived from those who still de­cide to buy and con­sume them.

Yes, obe­sity is not such a big health prob­lem in Zim­babwe yet like gam­bling but with stan­dards of liv­ing ex­pected to im­prove and con­sump­tion of fatty and sug­ary foods there is a pos­si­bil­ity it will be in the next few years.

As we have said, we sup­port im­po­si­tion of “sin taxes” as they tend to pro­mote a health­ier pop­u­la­tion which is also so­cially sta­ble and re­spon­si­ble. If the Govern­ment sees po­ten­tial in them it would be good this fundrais­ing op­tion is pur­sued be­fore other taxes are levied, for ex­am­ple on fuel.

They can help the Govern­ment meet the Abuja Dec­la­ra­tion thresh­old un­der which African coun­tries pledged in 2001 to al­lo­cate at least 15 per­cent of their na­tional bud­gets on health pro­grammes. They can also go a long way in en­hanc­ing the per capita fund­ing to the rec­om­mended $86 per per­son.

“The pro­posal to in­tro­duce ear­marked sin taxes to fund health needs to be fol­lowed through,” said CWGH ex­ec­u­tive di­rec­tor, Mr Itai Rusike.

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